Partnership

Dissolution

Medium

common

The following are the features of the Dissolution of Partnership:

(A) Assets and liabilities are revalued, and a new balance sheet is drawn.

(B) Economic relationships between partners continue, though in a changed form.

(C) The business is not terminated.

(D) The books of account are closed.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (B) and (C) only

(A), (B), (C) and (D)

(B), (C) and (D) only

✅ Drop

Looking at each feature for Dissolution of Partnership (which is reconstitution of the firm):

(A) Assets and liabilities are revalued, and a new balance sheet is drawn.

This is correct. During reconstitution events (admission, retirement, death of a partner), assets and liabilities are revalued to determine the true financial position, and adjustments are made in the books.

(B) Economic relationships between partners continue, though in a changed form.

This is correct. The partnership continues with remaining/new partners, though the terms of partnership (profit-sharing ratio, capital contribution, etc.) may change. The firm itself doesn't end.

(C) The business is not terminated.

This is correct. In dissolution of partnership, only the existing agreement is dissolved, but the business continues to operate. This is different from dissolution of firm where business terminates.

(D) The books of account are closed.

This is incorrect. Books are NOT closed during dissolution of partnership. The existing books continue with necessary adjustments for revaluation, goodwill, etc. Books are closed only in case of dissolution of firm.

The correct features are (A), (B) and (C) only, which matches Option 2.

However, this question was dropped by NTA, suggesting this question may have been removed from evaluation, possibly due to ambiguity in the question or options provided. NTA does NTA things :)

2026: 13 May Shift 2

If a partnership firm is being dissolved, a liability taken over by a partner is credited to :

2026: 12 May Shift 1

The dissolution of partnership cannot take place by which of the following way:

2025: 4 June Shift 2

In case of dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:

(A). In paying to each partner proportionately what is due to him on account of capital.

(B). The residue, if any, shall be divided among the partners in their profit sharing ratio.

(C). In paying the debts of the firm to third parties.

(D). In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner loan).

Choose the correct answer from the options given below:

2022: 30 Aug Shift 2

Aman and Mohan, partners of a firm decided to dissolve the business on 31-03-22. The firm decided to pay realisation expenses of Rs. 1,000 on behalf of Mohan. Rs.1000 will be debited to

2023: 28 May Shift 1

Rohit a partner paid the realisation expenses of Rs. 10,000 and he was to get a remuneration of Rs. 12,000 for completing the dissolution process and realisation expenses were borne by Rohit. The amount transferred to his capital A/c will be :

2025: 27 May Shift 2

In which of the following ways does dissolution of a firm take place?

(A) Dissolution by agreement

(B) Compulsory dissolution

(D) Dissolution by notice

Choose the correct answer from the options given below:

Solution

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